One in four Australian households have less than $1000 in cash savings

News Corp Australia Network Feb. 6, 2017 12:01am

Sophie Elsworth

MILLIONS of Australian households are living week-to-week and have less than $1000 in cash savings if an emergency arises, alarming new figures show.

The latest biannual ME Household Financial Comfort report showed one in four households have hardly any cash stashed away and households are also being squeezed by no incomes rises in the past year.

The report’s author, economist Jeff Oughton, said the financial stretch on households highlighted many people were feeling the financial pinch by stagnant wage growth and lack of money for a rainy day.

“The report shows you how many Australians at the end of the week don’t have any money left over and aren’t well placed to handle any unexpected financial emergencies,’’ he said.

“It weighs on their overall financial comfort.”

Consumer finance expert Lisa Montgomery said one of the main problems with households having little or no cash was that they had become too reliant on credit cards.

“We are using our credit cards so often and for so many things, not just for needs but for wants,’’ she said.

“A lot of people are finding if they don’t have enough money in the bank they can always use their credit card and that sets the philosophy that the credit card is always the back up so why have cash.”

Australians already owe $52.4 billion on credit cards and more than half of this is accruing interest ($32.2 billion.)

The average credit card interest rate is about 17 per cent.

The report also found only one in three households (32 per cent) experienced an income increase in the past year — one of the lowest levels since the report began publishing in 2011.

Mr Oughton said there was more financial strain on households particularly low-income earners who had been denied wage rises.

However, many of workers earning more than $100,000 experienced incomes gains in the past 12 months (46 per cent.)

“The rich appear to be getting richer while the rest of Australia is struggling, there’s a divide across households,’’ he said.

He blamed the shift in jobs as employment moved away from the mining and manufacturing industries, resulting in many workers leaving long-term employment and being forced to sign up to lower paying and less permanent jobs.